The Federation of Philippine Industries (FPI) on Wednesday cautioned the government against imposing an excise tax on sugar sweetened beverages (SSBs) that is too high, as this would cut the sales of beverage manufacturers and affect local farmers.
“My objection is that if the tax is too high, then it would decrease the sales of beverages. We are not against the tax if it’s minimal or negotiable, but not that high [P10] because it’s like you already killed the industry,” FPI Chairman Jesus L. Arranza said in a forum held in Quezon City on Wednesday.
“Demand for soft drinks is elastic, meaning higher prices will reduce consumption. If consumption declines, then production will go down, which, in turn, would lower demand for sugar. So both the sugar farmers and the labor force of manufacturing companies would suffer,” he added.
Under the proposed comprehensive tax-reform package of the Department of Finance, SSBs include soft drinks, soda, flavored-carbonated or noncarbonated beverages, fruit drinks, sports drinks, sweetened tea, coffee drinks and energy drinks, among others, would be taxed P10 per liter.
Arranza said he would present his group’s position in government hearings and meetings on the tax reform and will try to seek an “alternative measure”. At present, the FPI is composed of 40 industry associations, including those in the beverage sector and sugar industry.
“If you are going to ask me about my stand, there should be no tax. Because if I start bargaining now, then it’s like I accepted [the additional tax], that’s my negotiating stand,” he said.
“We are hoping, praying, that those in government would understand our stand because this would affect sugar farmers,” Arranza added.
Earlier, Sugar Alliance of the Philippines Spokesman Emilio Yulo said the P10 per liter excise tax could result in two scenarios for the sugar industry: first, lower demand for sugar due to lower sales of SSB products; and second, lower farm-gate price of the commodity due to absorbed costs by beverage companies.